The FTC Sends Warning to Ad Agencies and Businesses

The Federal Trade Commission (FTC) sent a notice to more than 700 companies this month about fake reviews and other misleading endorsements and how they will be fined if caught deceiving consumers.


The warning was sent to many well-known companies, consumer product brands, ad agencies and leading retailers. The recipients aren't in any trouble, but the FTC wants its message to be heard loud and clear.

The agency will be allowed to seek civil penalties against any business or advertiser that engages in deceptive or unfair practices such as:

"...falsely claiming an endorsement by a third party; misrepresenting whether an endorser is an actual, current, or recent user; using an endorsement to make deceptive performance claims; failing to disclose an unexpected material connection with an endorser; misrepresenting that the experience of endorsers represents consumers' typical or ordinary experience."

What's the price to pay if caught violating the FTC's order? Companies and ad agencies could face up to $42,792 per violation. It's a hefty price tag to fork up, but it's part of the FTC's move in reducing the amount of deception that exists out there to protect consumers.

The FTC's press release linked above stated that social media has "blurred the line" between what's real content and advertising, which has led to a boom in fake reviews and endorsements. But why is the FTC taking action now?

In April, the Supreme Court decided to limit the FTC's authority to return money to consumers duped by deceptive business practices. This ended the FTC's reign of sending monetary relief to help consumers, so it seems as if they're going after the companies that duped them instead to get the funds.